60 Million Microsoft Outlook.com Users Isn’t All That

Microsoft's Outlook.com webmail service is the fastest-growing to date. Photo: Ariel Zambelich/Wired

Microsoft’s new Outlook.com webmail service has racked up 60 million active users in the six months since its July customer preview launch, making it the fastest-growing email service yet. Microsoft is excited, and took Outlook.com out of preview mode on Monday and is ramping up adoption and marketing efforts.

But as impressive as that 60 million figure sounds, take it with a measure of skepticism. Microsoft has a somewhat loose definition of “active users,” and it isn’t clear how many of those “new” Outlook.com users are actually Hotmail refugees. That said, you can’t completely ignore the number, either, because Outlook.com is a solid product that offers appealing new features that resonate with consumers.

“Free email services are as common as dirt, so there is no enthusiasm for yet-another hum-drum e-mail service,” Matt Cain, Gartner’s lead e-mail analyst, said. “Consumers, are, however, intrigued by new inbox capabilities like message categorization or prioritization, slideshow assembly of photos or incorporation of social media aspects.”

Outlook.com is impressive. It’s clean, fluid, and intuitive — exactly what e-mail should be. Its messenger service connects to Facebook, and contacts can be pulled from there, Twitter, LinkedIn and even Google. And Microsoft won’t scan your e-mail for advertising purposes like Gmail. I like it a lot, but haven’t ditched Gmail for Outlook — and likely won’t. I sign on a few times a month because it’s the e-mail address tied to my Microsoft account. I’m happy enough with Gmail that I don’t want to have to deal with giving everyone my new e-mail address and changing the address associated with my bank, utility and other accounts.

So as I noted in July after spending some time with Outlook.com, “if you’re already committed to the Google product suite — Talk, Drive, Calendar, Reader, Google+, etc. — then making that switch to Outlook.com is going to take a lot of effort. Effort that isn’t worth it if you’re happy with Gmail.”

Despite my low activity, I am considered among the 60 million active Outlook.com users. That’s because Microsoft says it counts people who “sign in several times a month via the web, client, or smart phone to really use our service.” That means that Outlook.com’s tremendous growth is in part thanks to its somewhat loose definition of “active” user. What’s more, Outlook.com has a huge Hotmail user base to tap into and isn’t getting most of those new users from competing webmail services. Cain says it appears Outlook.com’s “growth is primarily driven by conversions from Hotmail — so, it is less impressive than net new signups would be.”

Microsoft wouldn’t share a specific breakdown of where its users are coming from, but did say it’s a mix of three categories: Hotmail upgrades, new signups and former customers reactivating their accounts.

“Many of the reactivated users have also created an @outlook.com alias to ‘upgrade’ their email address,” David Law, director of product management for Outlook.com, said in an e-mail. As for Gmail users like myself, he added: “We know that approximately a third of our new U.S. customers are active Gmail users, which means we’re getting a lot of people from Gmail that are anxious to try something new.” The emphasis should be on the word “try.”

At least it’s not Hotmail, right? Photo: Ariel Zambelich/Wired

That said, Outlook.com’s growth should not be ignored. It indicates that users are interested in new webmail services, whether they stick with it or not. Outlook.com offered a number of appealing features like graymail organization — putting newsletters and social media updates into specific folders. It could also display attachments as a slideshow directly in the body of the message — great for when you’re sharing photos via e-mail.

With Outlook.com out of preview mode, the company will start rolling out a new ad campaign to encourage new and former users to Microsoft’s e-mail vision. It will also start automatically switching all of its hundreds of millions of Hotmail users over to the Outlook.com interface — only boosting further growth.

“With Outlook.com, we’ve seen exponential growth that we’re really excited about, and we believe it’s the best e-mail service,” Law said. “There are good reasons to choose Outlook.com: the uncluttered UI, the connection to other services you actually use (Facebook, Twitter, etc.), the smart and powerful tools like Office Web Apps and SkyDrive built right in.” The company’s new TV ad says as much.

But all of this work isn’t all just because Microsoft wants to reinvent webmail. It’s a smart defensive move that shows the company wants to keep up with competitors, and even sprinkle in several add-ons to convince its users to stay on with Hotmail, upgrade to Outlook.com or even make the switch.

“Microsoft’s best bet is to migrate the vast Hotmail base to Outlook.com without losing consumers to Gmail, and it seems like it is a good position to do that. Microsoft needs to develop the Outlook branding in the consumer space to compete with Gmail which sees enterprise pull-through for Gmail as a result of its consumer popularity,” Cain said.

If the 60 million active users on Outlook.com are indication of anything, it’s that Microsoft isn’t willing to back down in its fight against Google — in this case, Gmail specifically. By topping off Outlook.com with a bunch of unique features, it’s at least succeeding in getting people interested. Whether or not that means people will actually completely switch over to Outlook.com is another question. But at the very least, Microsoft is doing what it can to keep its hundreds of millions of Hotmail users happy enough not to switch the other way around.